Group Treasury - investments EURbn. End of period 20 � Equities 14.7 – Listed, unlisted & private equity 15 funds 10 � Bonds – ¾ Nordic issuers 5 – Primarily govmn´t & mortgage inst. 0 Q3/01 Q4/01 Q1/02 Q2/02 Q3/02 Fixed income Equities 32
Pension commitments � Part of pension commitments in Finland and Sweden not recognised in balance sheet - fully covered in pension funds � Volatility in results related to Swedish pension fund � Finnish fund surplus at high level � Swedish fund made regular refunds of surplus in previous years 33
Pension commitments – financial structure in Finland and Sweden EURm Finland Sweden End of period 18 Oct Q3/02 Q2/02 18 Oct Q3/02 Q2/02 Assets 584 569 624 698 686 671 -of which contributions during the period - - - - 96 146 Pension commitments 539 537 533 687 686 671 Surplus 45 33 91 11 0 0 Equity exposure 32% 30% 33% 22% 25% 50% 34
Pension commitments � In Q3, Swedish fund – Declining equity values caused further deficit of EUR 78m – Increased liabilities and wage tax EUR 42m – Total allocation EUR 120m � Equity exposure significantly reduced – mid October 22 percent in Sweden � New benchmarks and investment policies established � Tactical asset allocation mandate managed by Group Treasury as part of total Group investments � Security selection mandate managed by Nordea Investment Management 35
Balance sheet - key items EURbn, end of period Sept 02 Dec 01 Change,% Lending 147 138 7 Deposits 91 83 10 Shareholders’ equity 12 12 0 Total assets 252 242 4 Risk-weighted assets 137 136 1 36
Capital adequacy Total capital ratio Tier 1 ratio % % 10 10 9 9 8 8 7 7 6 6 5 5 4 4 3 3 2 2 1 1 0 0 Q2/02 Q3/02 Q2/02 Q3/02 37
Repurchase of own shares � During the third quarter 40 million shares repurchased under the repurchase program announced on 19 June 2002 � Average price SEK 43.50 � In April 2001 17 million shares acquired for the purpose of achieving a hedge regarding incentive programme � Total holding of own shares 57 million 38
Capital efficiency – strenghtening the balance sheet Focus on strengthening balance sheet � Aim to reduce economic capital – risk weighted assets � Prioritisation of performance and profitability before growth � Sale of General Insurance and other non-core assets � Reduce aggregate capital markets exposure � Tier 1 target of 6.5%, total capital ratio target of 9.0% � Dividend will be given priority over repurchasing of own shares 39
Cost efficiency – improvement needed � Special attention to overall cost development – strict cost control � Further integration of business activities and processes � Reprioritisation of integration and development projects to adapt to current market conditions � Level of IT costs under consideration � Continuous reduction of the number of employees � Cost/income ratio level of 50% not achievable with current market conditions and business mix 40
Outlook - weak development in capital markets, key macro indicators revised downwards Q4/02 outlook � Stable business volume � Revenues in line with average quarterly level this year � Expenses somewhat higher than average level � Loan losses of the same magnitude as in Q3 41
Outlook - weak development in capital markets, key macro indicators revised downwards 2003 outlook � Potential for increased revenues considered limited � Increase in short-term interest rates not expected until late 2003 � Sharp attention on cost control � Uncertainty in the global economy may lead to credit deterioration medium term – target of maximum 0.40% remains unchanged 42
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Our mission: ‘Making it possible’ By providing a broad set of easily accessible and competitive financial services and solutions Nordea helps customers where we operate to reach their objectives. Our vision We will be valued as the leading financial services group in the Nordic and Baltic financial markets with a substantial growth potential. We will be number one or number two or show superior profitable growth in every market and product area in which we choose to compete. We will have the leading multichannel distribution with a top world ranking in e-based financial services and solutions. 44
Strategic direction Sustainable growth of economic profit Ensure Establish a stable and operational excellence and Optimise risk taking and broadly based growth of cost efficiency in all use of capital income processes Attract, develop and retain highly motivated, competent and empowered employees 45
Stable and broadly based growth of Sustainable growth of economic profit Ensure Establish a stable operational Optimise risk and broadly income excellence and taking and use of based growth of cost efficiency in capital income all processes Attract, develop and retain highly motivated, competent and empowered employees Focus going forward Grow share of wallet of existing customers in home market and significantly enhance position in Sweden Growth by market share in our emerging markets Implement Nordic business model for personal and corporate customers Maintain and reinforce the retail savings and investment proposition Increase share of commission income in corporate banking Expand the use of e-banking services among existing and new customers 46
Sustainable growth of economic profit Focus on cost efficiency Ensure Establish a stable operational Optimise risk and broadly excellence and taking and use of based growth of cost efficiency in capital income all processes Attract, develop and retain highly motivated, competent and empowered employees Focus going forward � Strict cost control throughout the organisation � Increased focus and speed in integration and unification of business activities � Development activities will be strictly prioritised in order to curtail short-term cost level � Continuous reduction in number of employees � Continue development of innovative e-service facilities for personal as well as corporate and institutional customers 47
Sustainable growth of economic profit Capital efficiency Ensure Establish a stable operational Optimise risk and broadly excellence and taking and use of based growth of cost efficiency in capital income all processes Attract, develop and retain highly motivated, competent and empowered employees Focus going forward Speed-up implementation of economic capital and economic profit framework Development of existing credit scoring models Use of capital market approach in corporate banking Implementation of new business model for Life & Pensions 48
Financial targets Key performance indicator Jan-Sept 2001 Target 2002 Total shareholder return,% -31.1 -19.8 In the top five of our peer group Dividend pay-out ratio,% 44 1) > 40 % of net profit Return on equity,% 10.0 2) 13.8 > Euro risk free interest rate +8% Assets under management growth,% -11.4 0 20 % p.a. Cost/income ratio, banking,% 64 58 < 50 % (2004) Merger synergies, EURm 242 168 360 EURm (2003) Average loan losses,% 0.18 0.29 < 0.40% of loans and guarantees 1) Dividend for 2001 EUR 0.23 per share 2) Return on equity(excluding goodwill) 49
European banks by market cap HSBC RBOS UBS LLOYDS TSB BARCLAYS HBOS DEUTSCHE BANK BNP PARIBAS SANTANDER BBVA UNICREDITO FORTIS ABN AMRO SOCIETE CREDIT SUISSE CREDIT AGRICOLE ABBEY NATIONAL STD CHARTERED DANSKE BANK NORDEA ALLIED IRISH BANKS SAN PAOLO IMI CREDIT LYONNAIS DEXIA INTESA BCI 0 10 20 30 40 50 60 70 80 90 100 Source: Bloomberg, October 2002 EUR bn 50
Strong distribution network throughout the Nordic and Baltic Sea region Finland Branch offices 444 Personnel 10,600 Sweden Helsinki Branch offices 267 Stockholm Personnel 8,500 Bergen St Petersburg Oslo Norway Tartu Tallinn Copenhagen Branch offices 147 Gdynia Riga Personnel 4,400 Moscow Vilnius Hamburg Gdansk Denmark Warzawa Branch offices 348 Radom Personnel 9,400 Luxembourg Frankfurt Baltic and Poland Branch offices 35 Personnel 1,000 Countrywide network Total locations 1,241 Branch office or subsidiary Total personnel* 33,900 Office of an associated bank 51 *Full time equivalents
Large customer base with high penetration in net banking Baltic Total Sea DK FI NO SE Region Banking customers (1,000) Personal customers 1,700 3,000 500 4,260 60 9,500 Corporate customers 80 330 65 460 10 950 Life insurance customers (1,000) 650 260 230 430 70 1,640 Net banking customers (1,000) 410 1,200 240 1,300 15 3,170 52
Strong positions in most Nordic markets Corporate and Institutional Retail Banking Asset Management & Life Banking Customer lending, customer Corporate Equity dealing Investment funds Life and deposit and mortgage Banking pensions volumes premiums Denmark 2 1 2 2 2 Finland 1 1 1 2 1 Norway 2 1-2 6 4 5 Sweden 2-3 2-3 8 2 8 53
Integration 54
Initial merger synergies � Total synergies of EUR 360m annually � Split between costs and revenues: 60/40 � Time period: 2001 - 2003 � Restructuring reserve of EUR 290m � Full effect from 2004 onwards � Required investments* of EUR 0 * Beyond restructuring reserve 55
Second Wave � Total synergies of EUR 300 - 350m � Split between costs and revenues: 100/0 � Time period: 2002 - 2004 � Restructuring reserve of EUR 0 � Full effect from 2005 onwards � Required investments(E) of EUR 350-400m 56
First and second wave of integration Annual synergies Degree of integration Second wave of integration • Common group infrastructure in middle office, back office and Estimated synergies of other support functions the same magnitude as • Common planning and performance the merger synergies management model • Common values and culture First wave of integration • The customer and the customer relation • Nordic products and services Merger synergies • Business structure EUR 360m • Legal structure alignment • Group policies and control 2000 2001 2003 2004 2005 2002 57
Second wave of integration � Consolidated into 15 main projects of which 7 are under execution � Requiring total investments of EUR 350-400m, 25% in 2002, 50% in 2003 and 25% in 2004 � Approximately half will be on top of ordinary investments in an average operating year � Investments in Q3 was EUR 15m (Q2: EUR 25, Q1: EUR 10m) 58
Postgirot Bank synergies � Total synergies of EUR 65m � Split between costs and revenues: 80/20 � Time period: 2002 - 2004 � Restructuring reserve of EUR 43m � Full effect from 2005 onwards � Required investments* of EUR 0 * Beyond restructuring reserve 59
Realised Synergies Realised Realised Realised Target EURm 2000 2001 2002* Cost Revenue Total Initial merger synergies CIB 20 98 123 92 32 124 Retail banking - 20 27 35 47 82 Other business areas** 3 9 33 20 51 71 IT - 29 42 55 - 55 Treasury - 21 17 - 15 15 Other group functions - - - 13 - 13 Total initial merger synergies 23 177 242 215 145 360 Postgirot Bank - - 20 - - 65 *Annualised and accumulated ** Asset Management and Investment Banking 60
Restructuring reserve EURm Originally, Unidanmark 200 Utilised 2000 -71 Originally, CBK 90 Remaining reserve Jan 2001 219 Utilised Q1/01 -18 Q2/01 -24 Q3/01 - 7 Q4/01 -110 Originally, Postgirot 43 Remaining reserve Jan 2002 103 Utilised Q1/02 -15 Utilised Q2/02 -15 Utilised Q3/02 -15 Remaining reserve end of June 2002 58 61
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Results by business area EURm 500 440 400 430 300 200 100 127 126 23 15 21 31 0 -13 -26 -100 -200 Retail CIB Asset Mgmt Life Treasury Q2/02 Q3/02 63
64
Retail Banking operating profit EURm 500 � Profitability at a high level, return on equity 24% 450 440 430 425 400 420 � Reductions in personnel and 350 cost/income ratio 366 300 � Increased volumes 250 � Tender offer for remaining 200 shares in LG Petro Bank 150 100 50 0 Q3/01 Q4/01 Q1/02 Q2/02 Q3/02 65
Retail Banking operating profit by markets Retail DK FI NO SE P&B EURm Q3 Q2 Q3 Q2 Q3 Q2 Q3 Q2 Q3 Q2 Q3 Q2 Net interest income 785 774 202 211 224 222 113 107 239 228 7 6 Non-interest income 327 362 74 88 88 76 48 41 113 125 4 5 Total income 1,112 1,136 276 299 312 298 161 148 352 353 11 11 Total expenses -633 -675 -153 -174 -149 -153 -100 -100 -221 -237 -10 -9 Profit bef. loan loss 479 461 123 125 163 145 61 48 131 116 1 2 Loan losses -49 -21 -10 -12 1 -3 -33 -5 -7 0 0 -1 Operating profit 430 440 113 113 164 142 28 43 124 116 1 1 C/I ratio % 57 59 56 58 48 51 62 67 63 67 96 86 RoE % 24 25 24 23 41 35 8 14 22 22 2 7 66
Retail Banking lending EURbn. End of period 40 35 30 25 20 15 10 5 0 Denmark Finland Norway Sweden Q2/02 Q3/02 67
Retail Banking deposits EURbn. End of period 25 20 15 10 5 0 Denmark Finland Norway Sweden Q2/02 Q3/02 68
Retail Banking deposits EURbn End of September 25 20 9.0 4.3 15 2.3 5.9 10 6.4 6.1 1.1 3.2 5 8.3 6.2 6.1 5.3 0 Denmark Finland Norway Sweden Corporate Personal customer - saving accounts Personal customer - current accounts 69
Retail Banking, volumes and margins Volumes Margins EURbn Q3/02 Q2/02 Q3/02 Q2/02 Lending to corporates 51.0 51.1 1.2% 1.2% Lending to personal customers 51.2 49.7 1.6% 1.7% Total lending 102.1 100.8 1.4% 1.5% Deposits from corporates 22.7 22.0 1.3% 1.3% Deposits from personal customers 37.2 36.3 2.1% 2.1% Total deposits 59.9 58.3 1.8% 1.8% 70
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E-banking customers E-banking customers Equity trading customers Mill. Thousands 3,5 350 300 3 250 2,5 200 150 2 100 1,5 50 0 1 May-00 May-01 Jan-02 May-02 Jan-00 Sept-00 Jan-01 Sept-01 Jan-00 May-00 Sept-00 Jan-01 May-01 Sept-01 Jan-02 May-02 Sept-02 Sept-02 72
Payments and log-ons E-banking payments E-banking log-ons Mill. Mill. 35 30 30 25 25 20 20 15 15 10 10 5 5 0 0 Q1/00 Q3/00 Q1/01 Q3/01 Q1/02 Q3/02 0 0 1 1 2 2 0 0 0 0 0 0 / / / / / / 1 3 1 3 1 3 Q Q Q Q Q Q Denmark Finland Norway Sweden Denmark Finland Norway Sweden 73
Penetration on the net Equity trading penetration rate Mutual funds penetration rate % % Executed trades 25 70 60 20 50 15 40 30 10 20 5 10 0 0 July-01 May-01 Nov-01 July-02 Jan-01 Mar-01 Sept-01 Jan-02 Mar-02 May-02 Jan-00 April-00 July-00 Jan-01 April-01 July-01 Jan-02 Apr-02 July-02 Sep-02 Oct-00 Oct-01 74
Cards Card payments Debit and credit cards Mill. Mill. 35 4,0 3,5 30 3,0 25 2,5 20 2,0 15 1,5 10 1,0 5 0,5 0 0,0 May-01 May-02 Jan-01 Sept-01 Jan-02 Sept-02 Jan-01 May-01 Sept-01 Jan-02 May-02 Sept-02 Debit cards 75
76
CIB operating profit EURm 160 � Operating profit stable 140 142 � Reasonable deal flow in weak 132 120 127 126 market 100 80 � Credit portfolio continued to 60 perform satisfactorily 40 20 -5 0 -20 Q3/01 Q4/01 Q1/02 Q2/02 Q3/02 77
Stock market development Market Volume Market index Change Q3 vs Q3 2002, Q3 2002, % Q2, % EURbn Denmark 12.8 -23.3 -21.9 Finland 39.0 -17.7 -14.2 Norway 10.6 -14.4 -25.5 Sweden 52.6 -24.3 -26.4 Nordic average -21.2 -22.0 Source: Nordea securities 78
CIB operating profit by main area Corporate Shipping & Inter- Inv. Banking Other CIB Division Offshore national Markets* EURm Q3 Q2 Q3 Q2 Q3 Q2 Q3 Q2 Q3 Q2 Q3 Q2 Q3 Q2 Total income 308 284 167 162 41 37 44 38 28 26 28 20 113 112 Total expenses -174 -170 -64 -77 -6 -9 -27 -22 -35 -35 -42 -27 -52 -51 Profit bef. loan loss 134 114 103 85 35 28 17 16 -7 -9 -14 -7 61 61 Loan losses -11 8 -9 -12 -1 9 -6 2 - - 5 9 - - Transfer risk 1 7 - - - - 1 7 - - 0 0 - - Equity method 2 -2 - - - - 1 -3 - - 1 1 - - Operating profit 126 127 94 73 34 37 13 22 -7 -9 -8 3 61 61 C/I ratio % 57 60 * Markets has product responsibility for trading products such as FX, fixed income and related derivatives and is evaluated by monitoring the product result. The product result includes all income and expenses related to the respective products, which is allocated to the customer responsible unit within CIB . 79
CIB net loan losses Q3/02 Q2/02 Q1/02 Q4/01 Q3/01 EURm Corporate division 9 13 16 33 33 1 -9 6 9 9 Shipping division International division 6 -2 -4 4 6 Acquisition finance 21 0 -2 21 41 Total 37 2 16 67 89 General provision -26 -10 - -39 75 Transfer risk -1 -7 2 -17 -11 Total 10 -15 18 11 153 80
CIB lending volume EURbn. End of period 30 25 20 15 10 5 0 Corporate Division Shipping and International Total offshore Q2/02 Q3/02 81
82
Asset Management, product result EURm 60 � AuM down by 7% in negative 56 55 50 market environment 50 49 � Increased focus and cost 40 reduction in Investment Mgmt 35 30 20 10 0 Q3/01 Q4/01 Q1/02 Q2/02 Q3/02 83
Assets under management, volumes EURbn End of September 120 100 80 60 40 20 0 Q3/01 Q4/01 Q1/02 Q2/02 Q3/02 Investment management Private banking Investment funds Real estate within Life 84
Asset structure – Investment Management* June 2002 September 2002 EUR 68bn EUR 63bn Int'l. fixed Int'l. fixed income income 12% 14% Nordic Nordic Nordic equities fixed equities 14% income 16% Nordic 43% fixed income 53% Int'l. equities Int'l. 21% equities 27% *Including mgmt of own investment funds 85
Asset structure – Investment Funds September 2002 June 2002 EUR 30.4bn EUR 34.2bn Balanced Balanced funds funds 13% 14% Fixed Equity income funds funds 47% 47% Equity Fixed funds income 40% funds 39% 86
Investment Funds volumes and margins EURbn Volumes, end of period Margins % 18 1,6 16 1,4 14 1,2 12 1,0 10 0,8 8 0,6 6 0,4 4 0,2 2 0 0,0 DK FI NO SE DK* FI NO SE Q2/02 Q3/02 Q2/02 Q3/02 * Net margin 87
European Fund distribution EURm � Nordea ranked among top 5 European 1800 cross-border fund managers by the 1600 Financial Times 1400 � 1000 active distribution agreements 1200 1000 � Assets by country of source: 800 – 32% from Germany 600 – 21% from Switzerland 400 – 16% from Austria 200 – 14% from Luxembourg 0 – 6% from France 0 0 1 1 1 1 2 2 2 0 0 0 0 0 0 0 0 0 / / / / / / / / / 3 4 1 2 3 4 1 2 3 – 3% from the UK Q Q Q Q Q Q Q Q Q Inflow AUM 88
Operating profit, Life Insurance EURm 50 � Reduction of risk exposure 40 � Equity holdings reduced to less 30 than 10% 20 � Equity holdings in Swedish 10 operations reduced to zero 4 0 -3 � Solvency robust in case of -13 -10 further equity market declines -26 -20 -49 -30 -40 -50 Q3/01 Q4/01 Q1/02 Q2/02 Q3/02 89
Life – operating profit Q3/02 Q2/02 Q1/02 EURm Operating profit, reported Q3 -13 -26 -3 Previous Commission income -5 -4 Income from insurance -2 37 Total income -7 33 Personnel expenses -13 -16 Other expenses -17 -13 Total expenses -30 -29 Investment earnings -12 0 Operating profit -49 4 Change of principles 23 -7 Operating profit, reported Q3 -13 -26 -3 90
Life - breakdown of operating profit Q3/02 Q2/02 EURm Normalised operating margin 126 51 Fluctutations compared to normalised -435 -545 investment return Chg in discount rate for life provisions -277 -94 Allocation to policy-holders -6 -11 Allocation from financial buffers 579 570 Operating profit Unit Linked business 1 2 Total operating profit -13 -26 91
Life EURm Q3/02 Q2/02 Q1/02 Q4/01 Q3/01 TRADITIONAL LIFE Premiums written net 381 486 559 589 367 Normalised investment. return 285 239 239 288 279 Benefits paid and change in provision -511 -642 -704 -889 -555 Insurance operating expenses -29 -31 -31 -29 -26 Normalised operating margin 126 52 63 -41 65 Short term fluctuations in investment return -435 -540 -158 267 -776 Change in discount rate for life provisions -277 -94 211 -228 4 Actual operating margin -586 -582 116 -2 -707 Allocated to policyholders -6 -11 -11 -5 -1 Change in financial buffers 579 570 -110 12 655 Net profit from Health & Pers. Accident insurance -1 -5 0 - - Operating profit -14 -28 -5 5 -53 UNIT LINKED BUSINESS Premiums written, net of reinsurance 84 125 134 189 91 Operating profit 1 2 2 -1 4 TOTAL LIFE & PENSIONS Premiums written, net of reinsurance 465 611 693 778 458 Total operating profit -13 -26 -3 4 -49 92 Of which allocated profit to Retail 14 16 12 22 11
Life EURm Denmark Finland Norway Sweden Other Total TRADITIONAL LIFE Premiums written net 156 141 53 29 3 381 Normalised investment. return 128 49 76 24 8 285 Benefits paid and change in provision -248 -168 -57 -35 -2 -511 Insurance operating expenses -10 -3 -8 -3 -5 -29 Normalised operating margin 26 19 65 14 3 126 Fluctuation compared to normalised investment return -259 21 -113 -82 -1 -435 Change in financial buffers -312 0 0 35 0 -277 Actual operating margin -545 40 -48 -32 0 -586 Allocated to policyholders 0 -6 0 0 0 -6 Change in financial buffers 538 -21 30 32 0 579 Net profit from Health & Pers. Accident insurance -1 0 0 0 0 -1 Operating profit -8 13 -19 0 0 -13 UNIT LINKED BUSINESS Premiums written, net of reinsurance 8 20 22 18 16 84 Operating profit 0 2 0 1 0 1 TOTAL LIFE & PENSIONS Premiums written, net of reinsurance 164 161 75 47 19 465 Total operating profit -8 15 -19 1 0 -12 93 Of which allocated profit to Retail 1 13 - - - 14
Life - investments EURbn. End of period 25 � Equity holdings reduced during latter 21.2 part of Q3 20 15 � Further reduced in Q4 10 � Equities – Predominantly listed equities 5 – 50/50 Nordic/international � Bonds 0 – ¾ Nordic issuers 15 Oct Q3/01 Q4/01 Q1/02 Q2/02 Q3/02 – Primarily govmn’t & mortgage inst. � Total portfolio Equities Bonds – Some bias to Danish securities Real estate Unit linked 94
Life - financial buffers* End of September 2002 % of guaranteed EURm liabilities Denmark 335 3.7 Finland 136 3.4 Norway 5 0.2 Sweden 32 2.2 Total 508 2.9 * Financial buffers are defined in accordance with local regulations and practices. 95
Life - solvency situation End of September 2002 Required Solvency Solvency in % of Actual solvency solvency buffer requirement EURm Denmark 85 103 20 124 Finland 186 434 249 234 Norway* 129 202 73 157 Sweden* 61 81 20 134 *Excluding unit linked companies 96
General Insurance – operating profit EURm Q3/02 Q2/02 Q1/02 End of period Operating profit, General Insurance -4 -87 -31 Previous Income from insurance 97 77 Total income 97 77 Personnel expenses -74 -63 Other expenses -41 -38 Total expenses -115 -101 Investment earnings -29 -7 Loss sale of General Insurance -40 Operating profit -4 -87 -31 97
98
Group Treasury operating profit EURm 40 � Volatile financial markets 38 35 35 � Positive active risk taking 30 31 25 20 21 21 15 10 5 0 Q3/01 Q4/01 Q1/02 Q2/02 Q3/02 99
Group Treasury � Group Treasury is managing the Group’s own direct investments in the financial markets and the market and liquidity risk in the banking book � The activities divided in three areas: – Active risk taking – Benchmark – Other equities 100
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